Nvidia Isn’t the Only Company Getting Rich From the AI Boom

GPU makers dominate headlines, but AI clusters need the cables, optics and chips that move data between processors. Credo Technology (NASDAQ:CRDO | CRDO Price Prediction) sells that connectivity layer to hyperscalers, and our model finds room for the stock to rise.

The 24/7 Wall St. price target for Credo stands at $263.13 over the next 12 months. That means 20.35% upside from the model’s reference price of $218.64.

Shares fell 4.41% early Monday to $208.99. At that price, the upside to our target grows to 25.9%. The model rates Credo a buy at a high confidence level. Two things drive that rating: sharply rising earnings and a valuation that sits below Credo’s closest connectivity peers.

Credo Has Bounced Back From Its September Sell-Off

Credo traded at $227.76 when it reported fiscal first-quarter 2027 results on September 1. By mid-September it had dropped to $161.49. Since then the stock has gained 26.49% over the past month. It is up 45.24% year to date and sits between a 52-week low of $86.48 and a high of $308.67.

The quarter itself was strong. Revenue of $479 million beat the $470.38 million consensus and rose 114.7% from a year earlier. Non-GAAP EPS came in at $1.20, ahead of the $1.17 estimate. For the full fiscal year, management expects revenue growth of more than 85% and optical revenue of more than $600 million.

Optical Growth Could Carry Credo Toward $336

The bull case reaches $335.72. Management expects zero-flap optics, silicon photonics PICs and optical DSPs to each bring in more than $100 million this fiscal year. Active electrical cables reach five hyperscalers.

Active LED cables and OmniConnect are expected to start producing revenue in fiscal 2028, with OmniConnect potentially adding “thousands of dollars of Credo content per GPU”. 19 analysts give the stock bullish ratings, with consensus target of $281.09.

Customer Concentration Puts the Bear Case at $208

The bear case is $207.54. Credo’s two largest customers made up 33% and 28% of first-quarter revenue. Inventory rose to $313.1 million. GAAP gross margin fell to 64.5% from 68.2%, though non-GAAP gross margin stayed at 68%.

Credo Trades at a Steep Discount to Marvell and Astera Labs

Marvell Technology (NASDAQ:MRVL) competes with Credo directly in optical DSPs, with 79% of its revenue coming from data center sales. Even so, it trades at 62x forward earnings while growing far more slowly. Marvell holds its Investor Day on October 6, so keep an eye on what it says about connectivity demand.

Astera Labs (NASDAQ:ALAB) competes with Credo in retimers and grows at a similar rate, yet it trades at 56x forward earnings. Next to these two peers, our target looks conservative.

Credo’s Valuation Gap Tips the Scale

The 24/7 Wall St. price target of $263.13 has a buy rating and 90% confidence. Triple-digit revenue growth coupled with a forward multiple well below peers points to further upside.

Confidence would rise if optical revenue accelerates in the second half as expected, and caution would set in if a major customer cuts orders.

The 2026 figure is our 12-month target. The forecast rests on Credo continuing to execute on its optical roadmap.

Any change in hyperscaler spending on AI could move the stock well above or below these levels. Credo is one of several picks-and-shovels names benefiting from that buildout; we featured seven of these non-chipmaker AI infrastructure suppliers in a free report you can grab here.

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